Cantillon's Sovereign

Richard Cantillon starts off his book on political economy by pointing out that all wealth has its source in productive land. From this, he ends up concluding that productive land is the best investment over time. However, he seems less sure of himself later in his book. Land can be confiscated. If the sovereign of the land gets greedy, there may be no profit left for land owners.

This derives directly from Cantillon's division of society into the sovereign, land owners and labourers, which corresponds to today's division into government, capital owners, and renters. A fair society according to Cantillon is one in which each of these layers get one third of the total production. But it's entirely up to the sovereign to establish this division. There's no guarantee that the sovereign will stick to this general rule.

Cantillon knew from history that sovereigns do on occasions go completely mad. There were periods in Roman history when taxes were confiscatory, and no-one in their right mind would have invested into land under such conditions. In times of war and unrest, productive land and capital is often laid waste. Laws may also be so restrictive that hardly any form of commerce is possible.

While discussing these types of extremes, Cantillon makes a remarkable statement about the nature of sovereignty. He claims that there are sovereigns among us that are not kings. Government is not the only entity that has the power to act without consent from higher authorities. Anyone in possession of gold can do this as well. Those who own gold are sovereign beings.

From this, we get a hierarchy of power identical to the one suggested in my book on political economy. Family elders can act as sovereign rulers, directing economic activity through their children and grandchildren. Largely isolated from government interference, the elders can do as they please. Their children and grandchildren are the ones interacting with government officials.

Under extreme conditions, the family sells everything for gold, which allows them to either move to somewhere else or sit out the insanity of their times. All sorts of constellations are possible, with family members living far and wide or tightly together. As long as they have gold, they can act independent of what government officials may deem legal. In the final analysis, it's possible to imagine entire regions breaking loose from a dysfunctional government and do things on their own.

It's no wonder then that government agents are generally hostile towards private ownership of gold. It's also clear why the British call their gold coin the Sovereign, because anyone in possession of such coins can do as they please.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link